Ontario played a leading role as the province shed 39,000 jobs amid a spate of winter storms that stalled construction projects. The provincial unemployment rate soared to 7.9 per cent from 7.2 per cent a month earlier. Government restraint and a weak manufacturing sector have also hit Ontario hard.

In Ottawa, federal finance minister Jim Flaherty said he sympathized with Canadians who had lost their jobs in December and that it’s a reminder “the economic recovery remains fragile.”

However, he also said the monthly numbers are volatile and that the overall trend —100,000 new net jobs in 2013 — is positive.

“This is encouraging and shows that Canada’s economy is on the right track,” Flaherty said.

Ontario’s Economic, Development, Trade and Employment Minister Eric Hoskins said provincial figures “weren’t what we had hoped for or expected.”

The national data missed economists’ forecast for a modest 14,100 increase in jobs with no change in the unemployment rate, based on a survey by Bloomberg News.

Full-time jobs fell by 60,000, wiping out most of the year’s gains at the most desirable end of the labour market.

December’s figures “were clearly disappointing,” Paul Ferley, assistant chief economist at RBC, wrote in a note to clients. The bank is predicting the surprise decline will reverse itself in the next few months.

The year-end decline brought the total number of new jobs for 2013 to 102,000, the smallest gain since 2009 and only a third of the prior year’s pace.

The average monthly rate for 2013 was just 8,500, compared to 25,900 in 2012, economists noted.

The U.S. economy also disappointed in December, creating just 74,000 jobs, its weakest performance in three years, according to a U.S. Labor Department report Friday. Severe winter weather was in part blamed.

However, the U.S. jobless rate improved, falling to 6.7 per cent, a five-year low, a separate U.S. household survey showed. Some of the decline was due to fewer people looking for work.

The Canadian jobless figures capped a week of disappointing data, including lower housing starts and a widening trade deficit, leading to speculation the Bank of Canada may be more inclined to cut its trendsetting interest rate.

The dollar is now down 2.7 per cent so far this year, on top of a 6.6 per cent decline in 2013.

However, economists said they believe the central bank would need to see further confirmation the economy is weakening and inflation is falling before moving to further reduce its 1 per cent overnight rate.

In the meantime, a plunging dollar may do the job of providing more economic stimulus if it makes Canada’s exports more attractive in its largest market, the U.S., economists said.

“It was a blue Christmas for many Canadian workers and job seekers,” labour economist Erin Weir, with the United Steelworkers, wrote in an email. “Canada’s job market ended 2013 with a thud.

“The notion that Canada has a stronger job market than the U.S. now rests on very thin ice,” Weir noted, even when differences in the way the data is calculated in the two countries are taken into account.

The labour force participation rate remained at 66.4 per cent, for a fourth month in December, and the lowest in more than a decade,

Average hourly wages of permanent employees rose 2 per cent in December from a year earlier, slower than the prior reading of 2.3 per cent.

For the year, employment grew the most in Alberta and Saskatchewan.

Among industries, more jobs were added in professional, scientific and technical services, as well as natural resources in 2013.

There were fewer jobs in agriculture, educational services, public administration and manufacturing.

The only age group that saw job gains for the year were 55 years or older as more of them looked for work.

For younger Canadians, age 15 to 24, the unemployment rate remained unchanged at 14 per cent.

With files from Richard Brennan, Robert Benzie

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